Unconstructive Dismissal

Let's talk about two concepts: Constructive dismissal, and the duty to mitigate.

What is Constructive Dismissal?

Most people have heard of constructive dismissal. They have some vague idea that it means that, if they're mistreated, they can quit and still seek a payout. That understanding is pretty simplistic, overstated at the water cooler, but underclaimed in practice.

Essentially, the doctrine of constructive dismissal arises from the legal principle that the employer is not permitted to unilaterally make substantial changes to essential terms of the employment contract.

Unilateral is simple enough to understand: If you agree to a change in your contractual terms, it's not unilateral, and not constructive dismissal.

But what of the rest? Understand that employers naturally have significant discretion in controlling the workplace. They can assign new duties to employees, they can implement new policies, they can even modify compensation packages. If you're hired to do payroll, and you're asked to take on some tasks from accounts payable, answering "That's not in my job description" would be insubordination under most circumstances. The employer can rewrite your job description at will, within limits. And the limits are shown in that, if you're hired to do payroll, and your boss reassigns you to a janitorial role, that likely will be constructive dismissal. Demotions and changes which significantly reduce the prestige of a role are often constructive dismissal.

Likewise, what changes to remuneration are acceptable is entirely a matter of scale. I once saw a presentation by Matthew Certosimo in which he reviewed the jurisprudence and proposed a general principle that changes in remuneration of less than 10% will not be regarded as fundamental changes to the employment contract, reductions of greater than 15% will be, and anything between...are in a grey area, and would be fact-specific.

Constructive dismissal can also result from harassment and other ill treatment, but again, it's a matter of scale.

Matters of scale leave large grey areas, and lots of uncertainty. In constructive dismissal, uncertainty is deadly. If you think you're entitled to quit your job and seek a payout, and you do so, but the Court disagrees, you get nothing. You'll have your own legal fees, and likely have to contribute to the employer's legal fees as well. There you are, unemployed, mistreated, with no entitlements, and massive legal debts.

And there's another hitch too which is growing in the jurisprudence.

Mitigating Losses

When somebody breaches a contract or commits a tort, the innocent party has an obligation to mitigate his losses - that is, to take reasonable steps to prevent additional damages from occurring. If I contract to purchase 100 widgets from you at $10 each, and the market price drops to $8 each before the transaction is complete, then I might back out of the contract since I feel I'm overpaying. Let's suppose you wait an additional year before trying to sell the widgets, and by that time the market has completely fallen out and the market price is only $1 each.

What are your damages for my refusal to close the transaction? Well, the compensation principle says that you're entitled to be put into the same position you would be in but for my breach. If I hadn't breached, you would have had $1000. Following my breach, you only realized $100 from the widgets. So your damages are $900, right?

Not necessarily: the mitigation principle kicks in here, and says that you should have liquidated the widgets promptly so as to avoid incurring further loss. You had only lost $200 - not $900 - when I breached, and you could have and should have sold then. To the extent that you took a risk and didn't, why should I bear the burden of that risk?

That's what mitigation means. Put into the employment context, it means that an employee who has been terminated without sufficient notice needs to try to find a new job. That is, he or she should take reasonable steps to procure equivalent replacement employment. A high-powered executive doesn't need to take a job flipping burgers to mitigate, but should be checking out other executive-level positions in the area.

Essentially, the point of mitigation is that a wronged party cannot recover for a loss which he could have avoided. So if you fail to mitigate, then your recovery will be limited.

How Do You Mitigate Constructive Dismissal?

The answer in many cases seems to be: Don't quit.

This isn't a new proposition. In 1989, the Ontario Court of Appeal ruled in the Mifsud case that the plaintiff employee was constructively dismissed by a demotion, but...

"Where the salary offered is the same, where the working conditions are not substantially different or the work demeaning, and where the personal relationships involved are not acrimonious (as in this case) it is reasonable to expect the employee to accept the position offered in mitigation of damages during a reasonable notice period, or until he finds acceptable employment elsewhere."

In other words, he was constructively dismissed, but it was nonetheless unreasonable for him to quit his job, and accordingly he could not recover.

Next up, Evans v. Teamsters, in which Mr. Evans was terminated, but the company offered him his job back on a contract basis up to the end of the notice period he was claiming. The Supreme Court of Canada followed Mifsud and concluded that it was unreasonable for him not to have accepted the job back.

And that's the way the jurisprudence is going now. See Loehle v. Purolator, which has similar facts to Mifsud: An employee was constructively dismissed by a demotion, refused the demotion and left, and the Court found that this was unreasonable - he should have kept the old job until he found a new one.

My Thoughts

I'm going up against some pretty tall authorities here (though even the Evans decision wasn't unanimous), but I think there is a big problem with this approach: When you can find that an employee has been constructively dismissed - as in, the employer has unilaterally made such a substantial change to the terms of the contract that it can be said to have fundamentally repudiated the contract - but the employee should keep the new job anyways, there's a disconnect. It becomes a right without a remedy. An obligation on the employer without recourse for its breach. Completely meaningless.

The standard for mitigation has traditionally been quite low. The employee is usually afforded a great deal of discretion. The employee is not expected to accept the first job that comes along. The employee is entitled to search for something equivalent to the old job. Aside from these "employment with the same employer" cases, I know of no authority which has ever suggested that an employee is obligated to mitigate by taking a lesser job on a temporary basis while searching for an equivalent job. So why are these cases any different? Why are the Courts in this narrow niche of cases telling employees, "Yes, you're entitled to treat the contract as repudiated, but you still have to stick it out until you find something new"?

In fact, I know of no principled reason why the standard for equivalency of employment for mitigation should be any different from the standard for equivalency in changing terms of the employment contract...and if there were a difference, I would think that the standard for mitigation would be easier to satisfy.

This is my proposal in a nutshell: If I am demoted in such a way that the demotion would meet the test for constructive dismissal, then the resulting job offer (i.e. of the lower position) prima facie fails to meet the standard of equivalent replacement employment, such that there is no obligation on the employee to accept it in mitigation.

Ultimately there is only one question here: Is the employee entitled to quit and seek reasonable notice? There is no reason whatsoever to need to apply both a constructive dismissal framework and a different mitigation framework to it. These should be consistent and lead to consistent results, rather than have inconsistent results rendering the other analysis meaningless.

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This Blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

Between a rock and a Concrete place

Beneff Concrete Ltd. is a Tillsonburg-based concrete company, with a labour force which is unionized through the Labourers International Union of North America (LIUNA) Local 1059.

Construction industry unions have their own statutory framework, and it's pretty complicated.

Most of us understand a union in the "factory floor" sense, where the factory staff unionize, the union steps in and gets to negotiate on behalf of all non-managerial employees in the factory. These workers get job stability, etc.

Construction Industry Unions

In construction, though, there is no such thing as job stability. Construction workforces are, by their very nature, unstable, and workers get picked up on a day-by-day or project-by-project basis. So in the construction industry, the unionization goes along different lines, and with different dimensions. Essentially, a union will become the certified bargaining agent of all employees of an employer doing a certain type of work (i.e. concrete formwork, electrical, carpentry, masonry, general labour, etc.) in certain types of projects (residential or ICI - Industrial-Commercial-Institutional) in a certain geographical region.

The geographical region is frequently defined by "Board Areas", set by the Ontario Labour Relations Board. Here's a Provincial map of the Board Areas.

It gets more complicated, too, because you get Province-wide collective agreements affecting multiple employers, etc., but that gets a little bit beyond the scope of what I'm talking about here.

I encourage you to look at that map, and specifically at Areas 3 and 4. Area 3 is pretty large: Bruce, Huron, Perth, Middlesex, Oxford, and Elgin counties. Area 4, on the other hand, is just Norfolk and Brant. (The map still labels "Haldimand-Norfolk", but Haldimand and Niagara are nonetheless Area 5.)

Now note where Tillsonburg is: In Oxford, but barely. It's in Area 3, but not far from Area 4.

Follow me so far?

Now, when LIUNA became the certified bargaining unit for Beneff, it became the certified bargaining agent for all of Beneff's "construction employees engaged in concrete forming and finishing construction on all construction projects within the counties of Middlesex, Bruce, Elgin, Oxford, Perth, and Huron, save and except non-working foremen and persons above the rank of non‑working foremen, office, clerical and engineering staff."

In other words, Board Area 3.

Trouble is that Beneff does a great deal of work in Norfolk. Technically, the certificate doesn't affect work being done in Norfolk. So Norfolk projects shouldn't be considered union work, the work and wages shouldn't be bound to the collective agreement, and no union dues should be remitted.

Actually, no, the trouble is that it appears that Beneff did so anyways. Maintained the applicability of the collective agreement, paid union dues, etc., relating to Norfolk projects.

No problem, right? Just stop. LIUNA's not entitled to it, right? Well, that might not work. You see, the way that labour law works in Ontario, when you voluntarily give a union something, it can be very difficult to take it back afterwards. For example, let's say you have a collective agreement requiring union representation for disciplinary meetings, but not investigative meetings. When you're holding an investigative meeting, the union rep will insist that union representation is required. The manager, who may or may not be aware of that specific aspect of the collective agreement off the top of his head, probably doesn't know the definition of "disciplinary meeting", and certainly doesn't want to be spending half his time trying to sort through the collective agreement every time he deals with the Union, will often just decide it isn't worth the fight and let the union rep in.

After that's happened a few times, it has become a "past practice", and the employer has a hard time reversing it. So even though the collective agreement doesn't give the union the right, they've built the right through the employer practice.

This is a little different...but in a context like this, it is open for the union to claim that they've been voluntarily recognized as having bargaining rights in Norfolk.

Anger v. LIUNA

This case is interesting.

Mr. Anger has brought an OLRB Application to terminate LIUNA's bargaining rights. As it happens, on the day that he brought the Application, the only projects where work was happening were in Port Dover and LaSalette. Because of the fluid nature of the industry, only people working on the day of the Application are considered for the purpose of a vote for certification or decertification. It's an arbitrary rule, but one the Board sticks to firmly, thinking it better than any of the alternatives. So...nobody was working for Beneff in Board Area 3 on that day.

The Union therefore quite cleverly answers, "Hey, look at the definition of our bargaining unit. There was nobody in the bargaining unit that day, and therefore the Application should be dismissed." It also argues that Mr. Anger was incited to bring the Application by the employer - if there's even a whiff of a scent of employer influence on a decertification Application, the Application is toast. (Makes it very difficult for decertification Applications to work. The OLRB has a very complicated set of rules and a complex process under an extremely sophisticated legal regime. Lay people find the process hard to stomach, and an individual union member will find legal fees hard to afford. And the employer can't help, and the union won't.

Of course, once the decertification Application is brought, the employer is entitled to intervene and make its own submissions. So Beneff's counsel - not identified by any of the decisions, but clearly a skilled labour lawyer - says, "Okay, that's fine, if the Union takes the position that the bargaining unit doesn't include Norfolk projects, then clearly they're right, the Application should be dismissed. But let's be real clear on this: If the Union takes that position, it will be stuck with it, and won't be able to fight us when we accordingly take the position that the collective agreement doesn' apply to Norfolk projects, we don't have to use union members for such projects, we don't have to pay them in accordance with the collective agreement if we do, and we don't have to remit union dues to the union for them."

For greater clarity, the question has been raised as to whether or not any of LIUNA's affiliates would claim to have bargaining rights in Norfolk. The Union is fighting this one tooth and nail, but without much success so far.

So the Union is faced with a tricky decision: Either they take the position that Norfolk is part of the bargaining unit, in which case the decertification Application can proceed, and they risk losing Beneff entirely, or they can cut their losses, say "Okay, fine, Norfolk projects aren't subject to the collective agreement", and accordingly lose Beneff's Norfolk projects for certain.

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This Blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

And on the other hand...

I once heard a joke that everyone wants a one-handed lawyer, because legal advice is so often qualified by "...but on the other hand..."

Last night I posted about the Human Rights Tribunal finding that, where a Union had settled a grievance on behalf of an employee (without the employee's consent and, in one case, over the employee's objections), the employee is bound by the settlement and can't subsequently initiate a Human Rights proceeding.

Today a new decision was published on CanLII in a different case, Parliament v. Metro Ontario (think 'grocery store' Metro).

Ms. Parliament alleged that the employer turned her down for a promotion because of her physical limitations. She filed a grievance.

For non-Union readers, you should understand that grievance processes usually have a series internal steps in which employer representatives will hear the case and determine whether or not the employer wants to accept the grievance. If the employer decides to reject the grievance, then the Union has the option of referring the dispute to arbitration.

This grievance was rejected by the employer, and the Union decided to accept the employer's decision and declined to refer the grievance to arbitration.

Ms. Parliament, however, didn't accept this, so she made an Application to the HRTO. Metro took the position that (a) the subject matter of the proceeding had been appropriately dealt with in the grievance and (b) in the alternative, the Application should be deferred until a final disposition of the grievance.

As the Tribunal points out, the positions are contradictory. Either the grievance process is done or it isn't. (It's kind of like defending a criminal proceeding by making an identity defence and an affirmative defence. "You're Honour, my client has an alibi, and was in Cuba at the time of the offence; in the alternative, in case that you don't believe the alibi witness, I'll be leading evidence to establish that the victim was charging at my client with a knife at the time. Even though my client was 4000km away.") Still, I kind of see the logic: There isn't a formal end to grievance processes if you stop short of arbitration without a settlement. There are time frames within which the matter needs to proceed, but arbitrators have jurisdiction to relieve against these time limits. So it isn't certain that the proceeding is dead. But, by choosing not to refer to arbitration within the timeframes, or even thereafter, the Union has abandoned the grievance, making the Human Rights Application an abuse of process.

I see the logic. I don't agree with it, but I could make that pitch.

The HRTO ruled that the failure to refer the grievance to arbitration didn't mean that the subject matter of the proceeding has been appropriately dealt with, for the following reason:

There is no information before me suggesting that the parties reached a settlement, that the applicant had any role to play in the Union’s decision-making, or that the applicant understood and agreed that her concerns had been appropriately dealt with through the grievance process.

This Tribunal has generally accepted that where a grievance dealing with substantially the same subject matter as an application has been settled by the parties, section 45.1 may apply to bar all or part of an application. Conversely, the Tribunal has held that the requirements of section 45.1 are not met where a grievance has been withdrawn unilaterally by a union....

So how do the 'settled without grievor participation' cases fit into this framework? Well, they're distinguishable from this case, in that money was paid, there was a settlement, which might tend to move it more towards the class of grievances 'settled by the parties'...but with the grievor not being involved in the settlement, it still seems more akin to a unilateral move by the union - unilateral in at least one of the relevant senses, in that the grievor is not a participant.

(I should also note that unilateral withdrawal by a Union from OLRB proceedings following after a Board mediation are usually held to be "with prejudice", meaning that the matter can't be raised again. Not particularly relevant, but an interesting side note in context.)

Let me cast it in this light:

You and I both grieve allegedly discriminatory treatment. Your grievance has real merit; mine has no merit whatsoever. The Union lacks the will and resources to fight either case, and so simply walks away from mine, and manages to extract a small settlement for your case (because the Employer recognizes the merits of your case), but one that does not nearly approach your entitlements or create a meaningful remedy to the discrimination. You rigourously object to the Union settling your grievance on this basis, but the Union persists.

What's the result? I get to go to the HRTO because my grievance was simply abandoned. You don't get to go to the HRTO because the employer saw enough merit in yours to offer money. I call that an incoherent result, where the meritorious claim gets killed but the nonsense one goes forward.

This is a conflict in the HRTO jurisprudence which will have to be worked out. Either Unions have the authority to raise and dispose of Human Rights disputes on behalf of the bargaining unit members, or they don't. It's that simple. In fact, it's simpler than that in my mind, because if it were the former it would undermine the purposes of the Code. So the answer ought to be that they don't. If the employee can't be said to have voluntarily agreed to dispose of a potential human rights claim, then they shouldn't be blocked by that purported settlement from making an Application to the Tribunal.

But that's my opinion, and clearly it's at odds with the opinions of the HRTO adjudicators, whose opinions are far more important than mine in this sort of thing. (I might be interested in hearing what the opinion would be of the judges of the Divisional Court, given the right fact pattern, though.)

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This Blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

Can your Union give away your Human Rights?

When a Union is certified as your collective bargaining agent, that displaces the common law freedom of contract. You can no longer deal with your employer on a one-on-one basis. You can't sue your employer in Court. Rather, the Union and the Employer will (and must) put together a collective agreement with an arbitration clause. Disputes prior to that stage, or other limited types of disputes, end up going to the Ontario Labour Relations Board. Only the Union or the Employer can refer disputes to arbitration; individual employees cannot.

The Union owes a duty of fair representation to the bargaining unit members, but they're given a lot of latitude in deciding how best to fulfill that duty. So if I complain to my union rep about being passed over for overtime, and the union brass figure that it's better for the whole bargaining unit (including me) not to stir up conflict with the employer over it, then there isn't likely much that I can do about that. (The one exception is with discharge grievances: If I've been fired, it doesn't do me any good whatsoever that the union wants to maintain positive relations with the employer, so the union can't refuse to advance my grievance.)

What if I'm suffering discrimination at the hands of my employer on the basis of, say, race? And my union rep says that stirring up racial tensions in the work place isn't worth the trouble, so they won't help me with my grievance...then what?

Well, the Human Rights Tribunal is one of the few places where you can go directly against your employer, bypassing the Union entirely. In times long past, there has been litigation about whether or not the collective agreement can contract out of human rights legislation...and the answer is not only that you can't contract out of human rights legislation, but that ensuring human rights compliance is the responsbility of both the Union and the Employer. So if a person needs an accommodated schedule for reasons of disability, then the fact that somebody of higher seniority may be put out by it won't ground a grievance. You can't absolve yourself of the duty to accommodate on the basis that the specific accommodation would breach the collective agreement.

It goes a step further, or at least it did: Let's say you grieve your discharge, and enter into a monetary settlement. Then you make a complaint that your employer discriminated against you in firing you, and try to get a human rights process going. The fact of the settlement won't necessarily block the proceeding. This is one of the reasons that the traditional full and final release has language expressly stating that any human rights claims are satisfied. You can't enter into a contract not to stand on your human rights, and if a release doesn't clearly set out that your human rights are satisfied, then adjudicators were prepared to say that it wouldn't block the human rights proceeding.

This is a very special place that Human Rights had in the law. Or at least, it was. Recent jurisprudence from the Human Rights Tribunal of Ontario suggests that this is changing. In particular, they're finding that grievance settlements can bar subsequent human rights proceedings even if the grievor didn't authorize or sign the settlement.

In Park v. Waterloo, it's a bit of a less clear case: The employee had a grievance and a complaint with the Commission going forward at the same time in 2008, but the Commission complaint was never acted on, and the employer never became aware of it. The union settled the grievance, money was paid to Ms. Park, and then in June 2009 she tried to continue to advance the human rights proceeding. This was the first time the employer became aware that she wasn't happy with the settlement.

So maybe Ms. Park isn't all that sympathetic.

But I'm deeply concerned about Rysinski v. Aecon Industrial:

Rysinski is physically disabled, and was fired by Aecon when it decided that they couldn't accommodate his disability anymore. Rysinski grieved the termination through his union, IBEW.

IBEW settled the grievance on Rysinski's behalf, and was entitled to do so under the terms of the collective agreement. The settlement was for the sum of $10,000. Rysinski didn't approve the settlement or sign a release. He did cash the cheque, but characterized it as "partial damages". He believed that he was entitled to something more in the ballpark of $65,000. (The 'partial damages' argument is somewhat coherent, actually: I'd more expressly do it under protest, but if I'm taking the position that you owe me $2, and you give me $1, what is the more reasonable thing for me to do? Pocket the loonie and ask for another one? Or throw it back at you and demand a toonie? Some doctrines would lead to the notion that refusing a partial payment waives the same. If I had a client bring in a cheque, I'd send a letter acknowledging receipt of the money, saying "This money will be deposited into my firm's trust account pending resolution of the outstanding issues", and expressly stating that the deposit of the cheque was without prejudice to my client's right to further pursue said issues.)

Rysinski then applied to the OLRB, accusing IBEW of failing in its duty of fair representation. However, the test requires some evidence that the Union acted in a manner which was "arbitrary, discriminatory, or in bad faith", and, when the only thing to go on was Rysinski's belief that he was short-changed, the OLRB found that he hadn't made a prima facie case.

Which brings us to the above-noted HRTO decision. Rysinski's next step was to bring an Application against the employer at the HRTO. So the question becomes whether or not the existing settlement gets in the way.

In the old days, the question would have been whether or not Rysinski understood and voluntarily accepted that the settlement was in satisfaction of any human rights-based claims. On these facts, the answer would have been a clear-cut "No"; the settlement wouldn't have bound him - not only did he not agree to it voluntarily; he never agreed to it at all!

But the HRTO went the other way on this. It found that the grievance procedure had appropriately dealt with the substance matter of the Application, through the settlement entered into by the Union on the grievor's behalf.

(There was also an Application against the Union for discrimination...this was more clearly estopped, given that he had already argued that unsuccessfully before the OLRB. The OLRB decided that there had been nothing discriminatory about the Union's actions, so the HRTO wasn't going to revisit the question. Neither here nor there.)

This is worrying to me. Recourse for breach of human rights was always an exception to the Union's exclusive right of representation. They couldn't contract out of the process (or the substantive rights), and they couldn't prevent a bargaining unit member from going to the HRTO. But now they can block a HRTO Application, and, so long as their actions aren't obviously capricious or in bad faith, the employee may find himself without any recourse as against either the Employer or the Union.

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This Blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.